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“Competitiveness” Has Nothing to Do With It
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“Competitiveness” Has Nothing to Do With It

Edward D. Kleinbard
Tax Analysts, 2014
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Editorial Rating

9

Qualities

  • Innovative

Recommendation

More and more US multinationals are undertaking corporate inversions – transactions in which a large firm becomes a “nominal subsidiary” of a smaller foreign company in a tax-friendly jurisdiction. Generally, companies structure such deals so that they can shelter income in a low-tax country. American corporations claim that these transactions are necessary if they are to remain globally competitive in a high US tax environment, but such assertions are “almost entirely fact free,” according to professor Edward D. Kleinbard. His rigorous examination of often-tedious tax rules contrasts with his fiery debunking of corporate complaints. getAbstract recommends Kleinbard’s intriguing, lively take on a timely topic – particularly as the White House moves to curtail inversions – to CEOs, legislators, and others with an interest in reforming the US corporate tax code and keeping American tax dollars in the United States.

Take-Aways

  • In a corporate inversion, a large company acquires a smaller, publicly held foreign company that is based in a more tax-friendly nation.
  • This practice is popular among large American firms, which claim that inversions make them more competitive by giving relief from the 35% US nominal corporate tax rate.
  • With tax planning, many firms pay less; they keep foreign income outside the US.

About the Author

Edward D. Kleinbard is a professor of law and business at the USC Gould School of Law.

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